Posted on 10/12/2022 12:02:16 PM PDT by Red Badger
'With many older people choosing to live in suburban areas or rural areas, some will benefit more...'
(Headline USA) On Thursday, the U.S. government is set to announce how big a percentage increase Social Security beneficiaries will see in monthly payments this upcoming year.
Some estimates say the boost for more than 65 million Social Security beneficiaries may be as big as 9%.
It’s virtually certain to be the largest raise in four decades and will add more strain on the welfare program’s trust fund, which is expected to expire within the next decade, even as younger taxpayers continue to invest money into the system that they are unlikely ever to see paid out.
The latest annual trustees report for Social Security said its trust funds that pay out retirement and survivors and disability benefits will be able to pay scheduled benefits on a timely basis until 2035. After that, incoming cash from taxes will be enough to pay 80% of scheduled benefits.
This year’s boost also is likely to fuel even more inflation, even as the Federal Reserve has aggressively begun hiking interest rates to offset the existing inflation caused by Democrats’ reckless spending sprees.
The increase is one-size-fits-all, which means beneficiaries get the same raise regardless of where they live or how big a nest egg they may have.
They’re also permanent, and they compound. That means the following year’s percentage increase, whatever it ends up being, will be on top of the new, larger payment beneficiaries get after this most recent raise.
Like the inflation that the increase is intended to address, the new cost-of-living adjustment may be the highest since 1981, when Social Security payments went up by 11.2%.
Automatic annual cost-of-living adjustments didn’t begin for Social Security until 1975, after a law passed in 1972 requiring them.
Last year’s increase of 5.9% was itself the biggest in nearly four decades.
Since 2000, it’s averaged 2.3% as inflation remained remarkably tame through all kinds of economic swings. Since the 2008 financial crisis, the U.S. government has announced zero increases to Social Security benefits three times because inflation was so weak.
Critics, however, say the data the government uses to set the increase doesn’t reflect what older Americans are actually spending, and thus the inflation they’re actually feeling.
The COLA adjustment is tied to a measure of inflation called the CPI-W index, which tracks what kinds of prices are being paid by urban wage earners and clerical workers.
More specifically, the increase is based on how much the CPI-W increases from the summer of one year to the next.
People generally pay more attention to a much broader measure of inflation, the CPI-U index, which covers all urban consumers. That covers 93% of the total U.S. population.
The CPI-W, meanwhile, covers only about 29% of the U.S. population. It has been around longer than the CPI-U, which the government began compiling only after the legislation that required Social Security’s annual increases be linked to inflation.
Some critics have argued for years that Social Security should change to a different measure, one that’s pegged to older people in particular.
Another experimental index, called CPI-E, is supposed to offer a better reflection of how Americans aged 62 and above spend their money. It has historically shown higher rates of inflation for older Americans than the CPI-U or CPI-W, but it has not taken hold. Neither have other measures compiled by organizations outside the government that hope to show how inflation affects older Americans specifically.
Recently, the CPI-E has shown a bit milder inflation than CPI-W or CPI-U.
To calculate the CPI-E, the government pulls from the same survey data used to measure the broad CPI-U. But there are relatively few older households in that data set, meaning it may not be the most accurate.
All indexes give just a rough approximation of what inflation really is. But the more pressing challenge may be that if the government switched to a different index, one that showed higher inflation for older Americans, Social Security would have to pay out higher benefits.
That in turn would mean a faster drain on Social Security’s trust fund, which looks to run empty in a little more than a decade at its current pace.
Through a complicated formula that takes into account several factors, including how much a worker made in their 35 highest-earning years. Generally, those who made more money and those who wait longer to start getting Social Security get larger benefits, up to a point.
This year, the maximum allowed benefit for someone who retired at full retirement age is $3,345 monthly.
“The COLA doesn’t take into account where you live or your actual spending patterns,” said William Arnone, CEO of the National Academy of Social Insurance.
“For some people, it’s an overstatement of cost of living for, say, small towns in the Midwest versus urban areas like New York, D.C. or Chicago,” he continued. “With many older people choosing to live in suburban areas or rural areas, some will benefit more” than others from the same-sized increase.
That in turn would mean a faster drain on Social Security’s trust fund, which looks to run empty in a little more than a decade at its current pace.
Another “Trust fund” lie.
The SS administration should bump everyone under a certain limit up, take away SS from those with retirement over a certain amount. Cut people pretending to be disabled off forever, privatize the entire system for the future, and let the old people stay comfortable until death, but END THE SYSTEM SOON..got to a Chile type of retirement. I will bet the Congress critters get a SS check AND retirement.... and a lot of them are doing it right now...Pelosi, Biden... and more.
T-bills.................
Exactly.
I am still working and drawing SS & VA (no Tax).
To lessen the taxes, I put the necessary amount into my IRA so it won’t get taxed until I retire in a few years.................
Good point, ‘Bracket Creep’ is a thing.....................
I hear “Farmers Dog” food is pretty good if you spice it up real good.
Pedo Joe is sending this money to people who are not STUPID.\
Who know they are being used and they will react accordingly.
If he thinks it will make him look sane...HE IS WRONG.
You cannot buy ME and I’m sure of many others who feel the same.
THEY ARE GETTING A GIANT INCREASE BECAUSE THE COST OF LIVING HAS GIANTLY INCREASED.
That’s not good.
Well, we’ll put the ‘Trust Fund’ in a ‘Lock Box’ according to Algore, and then we’ll hide that ‘Lock Box’ in Hillary’s Closet........Where it’ll be perfectly safe.......................
You would lose.
Congress knew from the beginning that SS was a bad deal and exempted themselves from the program.
Until, I think it was the 1970’s Congress could convert unused campaign funds in to a personal retirement fund.
Many congressmen would retire with millions of dollars in unused campaign dollars.
Given that like today, an incumbent congressman is reelected more than 90% of the time, candidates were fairly frugal with the campaign money. And back then there were no limits on campaign donations.
The Congress certainly had no need for SS.
Social security is NOT welfare. Workers paid into it as did their employers on their behalf. Not our fault that the government stole our money.
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